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Forrey, Republican Land Board at odds over commercial property policy

Forrey, Republican Land Board at odds over commercial property policy

Mitch Coffman
May 22, 2012
Mitch Coffman
May 22, 2012

The Idaho Land Board has come under some amount of fire for its dealings in commercial properties. On one side of the controversy is the sentiment that the Land Board is just another government bureaucracy and should not be involved in anything that competes directly with the private sector, such as a storage unit facility that was purchased in August 2010.

Opposing is the board itself. It maintains that, according to the Idaho Constitution, it is charged with the securing “the maximum long term financial return …” for the endowment fund.

Well, if commercial properties do that, then the issue is solved, right?

Not really. Former Nampa legislator Robert Forrey, a Republican, has become the unofficial watchdog on Land Board issues. He says the members of the Land Board are, basically, a contradiction. “The board, they’re all Republicans,” says Forrey. “You’d think they would have a little regard for the platform they run on.”

Forrey cites a plank in the Republican platform in Idaho, which says, “Idaho Republicans will continue to lead the fight to reduce the growth of government bureaucracy and promote private enterprise and individual initiative in the marketplace as a solution to our domestic policy challenges.”

“Well, having the government go out and buy up commercial property certainly isn’t promoting private enterprise,” said Forrey.

IdahoReporter.com asked the former lawmaker how to reconcile the conflict between the Land Board’s charged duties in the constitution and competing against the private sector.

It was not a question that caught him unprepared. “I would recommend the members of the Land Board read the constitution,” he said. Article IX, Section 8 of the Idaho Constitution has been used by the board as a way of deflecting criticism. The board says it is bound by the constitution to maximize the return to the taxpayers.

Forrey disagrees with that interpretation. Although the section is fairly long, Forrey points to the exact portion that is repeated often in defense of board policy. It reads, “It shall be the duty of the state board of land commissioners to provide for the location, protection, sale or rental of all the lands heretofore, or which may hereafter be granted to or acquired by the state by or from the general government (federal government) …”

The former lawmaker says that the literal meaning of the section is different than it has been used. “Now, the general government never did grant them a storage unit, or a bank building, or anything like that. And, the state never acquired a commercial building or business from the general government, the federal government. There’s no authority in the constitution for them to go out and buy anything. If they’re not limited to that, the sky is the limit,” he says, wondering what next for the board in securing something to compete with the private sector.

What makes the Land Board issue even more interesting is that last summer Gov. Butch Otter told IdahoReporter.com that in looking back on the purchase of the storage unit facility, it was a mistake, saying that directly interfering with the private sector was not a good idea.

A recent Land Board meeting found three of its members—Lawrence Wasden, attorney general; Donna Jones, controller; and Ben Ysursa, secretary of state—supporting current board policy. Tom Luna, state superintendent of public instruction, opposed it. Otter, saying he was in conflict on a proposed piece of Land Board legislation because he serves as a member of the Land Board and as chief executive with the power to veto legislation, did not feel he could express an opinion on the legislation.

The board continues to purchase commercial property in the state and it continues to annoy folks like Forrey. When IdahoReporter.com contacted Otter’s press secretary, Jon Hanian, about the governor’s current position, Hanian and the governor chose not to answer any questions, but instead deferred to the Idaho Department of Lands.

Kathy Opp, deputy director for the Department of Lands, said that not only is the Land Board mandated by the constitution, but that for over 100 years it has been in competition with private enterprise. “The Land Board is mandated to manage those (lands) in trust,” adding, “We’ve been in competition in all of the business sectors that we operate trust lands in for 120 years, since the (state) constitution.”

Opp said in order to operate the trust correctly, it’s smart to branch out into different areas, instead of being so dependent on one area, like timber.

Tom Schultz, director of the Idaho Department of Lands, said in looking at commercial properties, specifically the storage unit facility, the financial returns “have been far outpacing what we’ve typically seen with other types of investments. Whether it be timber, ag grazing, we’re looking at a 9.2 percent return. So, from a financial investment for the return to the beneficiaries, I don’t care how you measure that, it’s been a positive.”

While Schultz is confident in the financial part of the issue, politically is where he potentially sees some problems. “Obviously during the session there were concerns raised politically about that (buying commercial properties) and we’ve heard from folks in the business community. I think we, as an agency, will continue to do our due diligence and look at properties, aware of the socio-political realm that we work in.”

Opp said she fears there is a feeling that the Land Board “operates in the capacity of general government,” or, a government bureaucracy, which she says is untrue. Opp said the Land Board operates as a trust and that people need to understand the role and responsibility of a trust as defined by the mandate in the constitution.

“We’re not trying to take over the world here, we’re trying to manage very specific assets,” she said.

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